A mining billionaire has defended his relationship with former New South Wales Labor minister Ian Macdonald at the time when controversial mining licences were issued in the Bylong Valley.

The Independent Commission Against Corruption (ICAC) is investigating allegations former Labor minister Eddie Obeid and his associates stood to profit $100 million from inside knowledge of mining licences and a rigged tender process.

An inquiry has heard they got the information from the office of Mr Macdonald, the former mining minister.

The Obeids are accused of trying to cover up their involvement in mining projects through complex company structures.

At the ICAC on Thursday, one of the directors of Cascade Coal, Travers Duncan, denied he was Mr Macdonald's friend at the time certain licences were issued.

The mining billionaire said they were just "business associates".

However the inquiry was presented with numerous records of them dining together in restaurants across Sydney.

When asked if he had any mates in the Primary Industries Department, the 80-year-old replied, "not that I know of".

The ICAC was then played a March 2011 phone tap of Mr Duncan talking to another Cascade Coal director, John Kinghorn, a month before White Energy was in negotiations to buy Cascade Coal for $500 million.

Although Mr Duncan told the ICAC he did not ask anyone in the department to check out a file on a mining project, in the phone conversation he said, "I've asked a mate of mine in the department and he said the file is totally clean".

Mr Duncan continues his evidence today [Friday].

Another witness, James McGuigan, the son of Cascade Coal director John McGuigan, tried to avoid answering questions about his alleged involvement in sending the department various letters to create the illusion several companies were applying for licences in the Bylong Valley.

He finally admitted signing one letter, but said he was "directed to sign it" by another Cascade Coal director, Richard Poole.

"I didn't apply my thoughts to it at the time," Mr McGuigan told the hearing.

At one point the witness was advised to read up about the US soldier who claimed he was following orders when he participated in the My Lai massacre during the Vietnam War.

Commissioner David Ipp later told Mr McGuigan to "stop playing around".

Mr McGuigan said he did not know where his father obtained a confidential document about mining areas in the Bylong Valley.

The inquiry heard that investigators have recovered documents from James McGuigan's former employer, investment bank Arthur Phillips.

Since July, Mr McGuigan has been employed by Cascade Coal as a project coordinator for the Mount Penny tenement in the Bylong Valley.

Mr McGuigan also said he was mistaken when he told a private ICAC hearing earlier this year that he knew about the Obeids' involvement in certain mining projects.

He said he was "flustered" while giving his evidence and denied changing it because he feared it could be prejudicial.

Counsel assisting the ICAC, Geoffrey Watson, took exception when Mr McGuigan referred to matters related to mining tenders as "coincidences".